Court grants declaratory order on 'once empowered always empowered' BEE transactions

Cape Town – A High Court has granted a declaratory order on the “once empowered always empowered” rule for BEE ownership transactions related to the mining industry.

The order was made on Wednesday afternoon – the matter was heard in November 2017 by a full bench of judges at the North Gauteng High Court which included Judge Peter Mabuza, Judge Tina Siwendu and Judge Frans Barrie.

The respondents, Department of Mineral Resources (DMR) and the deputy director general will have to cover the costs of the application.

The applicant, the Chamber of Mines, had disputed a provision in the 2017 Mining Charter which required holders of mining rights to top up black ownership of its mines to 30% if ownership fell below the level.

This meant that if a BEE partner had exited a partnership or if shares were sold to someone who was not historically disadvantaged then the mining company would have to top up the BEE ownership level back to 30% within a 12 month period.

The Chamber’s legal counsel argued that the top up provision is unconstitutional as it is vague and uncertain and would steer away investment.

The declaratory order recognises the continuing consequences of previous BEE ownership transactions, the Chamber said in a statement.

“The Chamber notes and accepts the High Court judgment. The Chamber is engaged in meaningful processes with other stakeholders, including the DMR, to shape and develop a new Mining Charter that all stakeholders can support and defend,”said Chamber president Mxolisi Mgojo.

“This new Charter needs to help the mining sector to achieve stability, competitiveness, transformation and growth, and to ultimately enable the sector to realise its true economic and transformational potential.”

Various stakeholders are re-engaging to finalise the Charter. New Mineral Resources Minister Gwede Mantahse hopes to finalise the Charter in three months.

President Cyril Ramaphosa has also committed to ending the impasse on the Charter during his State of the Nation Address in February. He told Parliament in March that the new Charter should benefit South Africans and not a select few.

He was hopeful that an agreement on the Charter could be reached within the three-month timeline. Mantashe has been engaging with various stakeholders to address the matter.

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